CSU Budget Cut Still Provides for Continued Student Access
May Revise Offers Slight Increase for Enrollment

Under the May Revision to the state's 2002/03 budget released this week, Gov. Davis has
proposed a general fund support budget of $2.758 billion for the California State University. The
revised budget includes one-time cuts but adds revenue to fund more than 20,000 additional
students in 2002/03.

"We appreciate the governor's continued commitment to meet the California State University's
escalating enrollment demand by adding another 1 percent for student growth," said CSU
Chancellor Charles B. Reed. "The budget still leaves the CSU with unmet needs, but in this
harsh budget climate we realize that it is not possible to meet all the system's requests."

The May Revise increases the governor's January budget for the CSU by $19.5 million for a 1
percent growth in student enrollment. This is on top of the 4 percent for growth proposed in the
governor's January budget. However, the May Revise reduces the CSU's base budget support by
$43 million in one-time cuts in long-term needs such as technology, libraries, maintenance and
equipment.

The governor proposes total cuts of about 2.5 percent, or $50.4 million, which includes the $43
million and also $6 million to eliminate funding for the Educational Technology Professional
Development Program. Plus, the governor also proposed to convert the Governor's Teaching
Fellowships from direct grants to loan repayments, which in effect is a $21 million funding shift.

"At this point, these cuts are manageable," said Richard West, CSU executive vice chancellor
and chief financial officer. "Higher education so far has been spared drastic reductions, which
means we should be able to provide access to students and not reduce student services, which is
our goal."

Overall, the governor's May Revise addresses California's projected $23.6 billion gap between
expenditures and revenues through the 2002/03 fiscal year, or 30 percent of the general fund.
The governor proposes to address the shortfall through a combination of spending reductions and
revenue increases, as well as fund shifts, loans, accelerations, transfers, and deferrals.

The governor's budget now goes to various legislative committees, which will take action on the
proposal over the next two months. The budget is supposed to be signed by July 1, but in this
budgetary climate, that may not be possible.
May Revise.

Trustees Approve 15 percent increase in nonresident tuition fees

The trustees, with two dissenting votes, approved an increase in nonresident tuition fees,
effective fall 2002. A full-time student, taking 15 units per semester, would pay an annual cost of
$8,460, up from the current $7,380. Nonresident students also pay the annual State University
Fee of $1,428, plus campus-based fees.

The new nonresident fee would be $282 per unit per semester and $188 per unit per quarter. The
current fee is $246 per unit per semester and $164 per unit per quarter. This is the first increase
in nonresident fees since fall 1991. Even with the increase, CSU fees are the third lowest among
15 public institutions used by the California Postsecondary Education Commission for
comparative purposes. The fee increase will provide $11.7 million in additional revenue that will
assist in funding CSU budget needs.

Student Trustee Dan Cartwright spoke against the increase, saying that students should not have
to make up for budget shortfalls. Conversely, Trustee and Vice Chair Murray Galinson said that
California taxpayers should not subsidize out-of-state students, and that they should pay fees
closer to the cost of education, which is more than $10,000 per student.

Chancellor Reed talked about the process of consulting student and faculty leaders about the
proposed increases, and stressed that nonresident fees have not been raised since 1991. He called
that "not the best policy to follow," since it meant higher one-time raises rather than predictable
increases. Reed said that CSU would review the fee policy over the summer to look at periodic
adjustments, perhaps tied to the campus catalog that students enter under every four years.

Faculty Trustee Harold Goldwhite agreed that a predictable, reasonable and sensible process for
fee increases would make sense, but voted for this increase because of the current budget
situation.

There are approximately 10,000 students affected by the new tuition increases.

Trustees Endorse Education Bond Act

The Trustees unanimously endorsed a resolution supporting the education bond act that will
appear on the November 2002 and March 2004 ballots. Over the four-year period, the $25.3
billion measure will provide $4 billion to the state's higher education institutions – the California
State University, University of California and California Community Colleges. The bulk of the
funds will go to the state's K-12 schools.

Funds will be used to build classrooms, libraries and laboratories, as well as additional
construction and technological upgrades. Current bond funding runs out June 30, 2002, so
passage of a new bond is essential to higher education's construction needs. Voters will be asked
to approve a $13 billion bond issue this November and another $12.3 billion in March 2004.

Trustees Elect New Officers

The new chair of the CSU Board of Trustees is Debra Farar, who had been the board's vice chair
and a trustee since 1999. Farar, a long-time education consultant and former advisor to the
previous lieutenant governor, holds bachelor and master's degrees from Cal State Northridge and
a doctorate from Pepperdine University.

In her remarks, she called the CSU trustees "the best board of higher education in the country….
As trustees and leaders of the CSU, we need to remember that we have an important leadership
role not just here in California but in serving as a model for the entire country. I want to let all of
you know that I consider serving on this board a wonderful honor, a great privilege, and an
enormous responsibility. I pledge to all of you that I will continue do my best to carry out that
responsibility."

Elected as vice chair is Murray Galinson, chairman of the Board of San Diego National Bank. He
also serves on the boards of several foundations, including the Galinson Family Foundation,
Weingart Foundation and Price Family Fund. He has been a member of the board since 2000.

Trustees ratified the collective bargaining agreement reached between the CSU and the
California Faculty Association. The three-year agreement approved by the CFA membership on
March 26, 2002, provides a 2 percent faculty salary increase for each fiscal year 2001-02 and
2002-03, and additional selected raises for 2002-03. The agreement would be in place through
June 30, 2004.
Agreement Details.

Wang Excellence Awards Presentation

Chair Farar and Chancellor Reed presented the CSU Wang Family Excellence Awards to faculty
and administration members Wayne R. Bidlack of Cal Poly Pomona, William Dorman of CSU
Sacramento, Margaret McKerrow of San Diego State University, Herbert Silber of San Jose
State University and Hallie Yopp Slowik of CSU Fullerton. They were also honored at a dinner
that night at the State University House.

The Wang Award was established in the fall of 1998 with a $1 million donation by former
Trustee Stanley T. Wang to reward outstanding faculty and administrators. Each recipient
receives a $20,000 check. Wang's donation is the largest gift ever given to the CSU system
office by an individual.

Annually, during a 10-year period, four faculty and one administrator throughout the CSU
system will receive a $20,000 award. This is the fourth year the awards have been given. A press
release on the subject is available here.

The Trustees Approved:

The 2001/02 Legislative Report No. 8.

Issuing systemwide revenue bonds and related debt instruments for various projects,
including student housing at Cal Poly Pomona, a public radio station facility at CSU
Sacramento, and a food service center at CSU Northridge.

Private-sector participation in the development of a 49.5-acre avocado orchard at Cal
Poly San Luis Obispo. Cal Poly President Warren Baker presented a bag of avocados to
each of the trustees to give them a "taste" of the eventual product. This program will
provide internships to university students in the operation of the orchard. The company
developing and operating the property will donate approximately $50,000 annually to the
campus to expand programs.

Amending the 2001/02 Capital Outlay Program, Nonstate Funded, to include five
projects: the Campus Children's Center, the Gateway Addition, and the Student Center at
San Diego State University; the renovation of the Romberg Tiburon Center at San
Francisco State University; and the South Campus Park and Ride Lot at San Jose State
University.

The new Campus Master Plan for the California Maritime Academy, with certification of
its Final Environmental Impact Report. This is the first master plan for the academy to be
presented to the trustees since the academy joined the CSU system in 1995.

Schematic plans for the CSU Fresno Science II Replacement Building, which replaces
aging temporary facilities, and for the University Union Expansion Project at CSU
Hayward.

Recognition of the Mary Stuart Rogers Foundation and John and June Rogers for their
support of CSU Stanislaus. They have given $9.8 million to the university. The Rogers
also have generously donated to Cal State San Bernardino and Cal Poly San Luis
Obispo.

A schedule of meeting for the Board of Trustees for 2003. All meetings will be at CSU
headquarters, except for the March 11-12 meeting at Cal State Fullerton.

Setting the annual salary of newly appointed Humboldt State University President Rollin
C. Richmond at $230,016, with an annual housing allowance of $28,008. He will assume
the presidency July 1 upon the retirement of Alistair McCrone, the CSU's longest serving
president. McCrone has been president at Humboldt since 1974.

Recognition for CSU Bakersfield Men's Swim Team, which won its third consecutive
national championship in Division II. Also recognized was Cal Poly Pomona Women's
Basketball Team, which won its second back-to-back championship and its fifth overall.
CSU San Bernardino's Model United Nations and League of Arab States Teams were
honored for being selected for "Outstanding Delegation" awards. Members of all three
universities' teams were present for the presentation of proclamations.

Conferral of the title Trustee Emeritus upon departing trustees Stanley T. Wang and
Laurence K. Gould, Jr. whose terms have both expired.

The Trustees Heard:

A report on the CSU Systemwide Revenue Bond Sale.

A status report on the 2002/03 State Funded Capital Outlay Program and Economic
Stimulus Package.

An update of CSU advancement activities. Vice Chancellor Louis Caldera reported on
the departure of former director of federal relations Barbara Bennison and the
appointment of acting director Jim Gelb.